PayPal’s earnings suffer as COVID-19 weighs on spending
PayPal Holdings Inc announced a quarterly profit slump of 87.4 per as COVID-19 lockdowns impacted consumer spending and forced the payments processor to increase its credit loss reserves, driving its shares down 3.7 per cent in extended trading.
The coronavirus outbreak has pressured businesses to lay off millions of workers, weakening consumer confidence and dramatically impacting people’s ability to spend on non-essential products.
“In March, PayPal’s business was further impaired by the worsening climate arising from COVID-19, both affecting travel and events verticals as well as impacting credit revenues,” the firm said.
During the first quarter, PayPal processed payments to the amount of $191 billion, 18 per cent up from last year, but missing the forecast of US$194.23 billion analysts projected.
The company said, despite adding that in the second quarter the sales were restored, aided by a rise in eCommerce, operating profits decreased by a $237 million raise in credit loss reserves.
Net income declined to US$84 million, or 7 cents per share, in the quarter ending March 31, from US$667 million, or 56 cents per share, a year ago.